How to protect yourself from tax refund fraud

How to protect yourself from tax refund fraud

For victims of tax identity theft, however, the wait can drag on for almost a year. Not to mention they may have to deal with a lot of red tape to get what’s rightfully theirs. That’s why it’s critical to understand:

How tax-related identity theft works

How to reduce chances of becoming a victim

What to do, if you do become a victim

This article will help you keep your hard-earned refund safe.

How tax identity theft works

In 2016, employment and tax-related identity theft were the No. 1 forms of identity theft, accounting for 34 percent of consumer complaints.[1] In fact, tax-related identity theft has been a huge problem for the Internal Revenue Service (IRS) and taxpayers alike for many years.

These numbers are so high because for many years tax identity theft has been relatively easy. Criminals simply file a fraudulent tax return with a counterfeit W-2 form under the victim’s name and Social Security number (SSN), and then wait for a refund from the IRS.

If the IRS fails to identify the fraudulent return and sends a check to the fraudsters, then instead of a refund victims receive a notification that their return already has been filed.

A tax return could also be delayed if another person uses a stolen SSN for employment. For example, if an employer reports a fraudster’s income under your SSN, then your return will be flagged for unreported wages.

The good news this year is that the IRS is getting better and detecting and stopping fraudulent returns. The bad news is that the identities of 143 million people were exposed in a data breach at Equifax in 2017, making tax identity theft awareness critical.[5]

The No. 1 prevention step

Filing your tax return early is the best thing you can do to reduce the chance of becoming a tax fraud victim.

Submitting your tax return as soon as possible after receiving all of the necessary paperwork from your employer or clients reduces the chance that crooks will file ahead of you in your name.

It’s also important to be on the lookout for warning signs for tax-related identity theft, which include:

A notification that your SSN was used to file more than one tax return

CyberScout is leading the charge against hackers and thieves, providing identity management, credit monitoring and cyber security for more than 17.5 million households and 770,000 businesses. Contact any First Security banker to find out more about our FraudScout® offer for comprehensive identity monitoring. Contact us at 800.272.0159 or visit www.1stsecuritybank.com for more information.

*Please be advised that you are leaving First Security Bank and Trust's website. These links are provided as a courtesy. First Security Bank and Trust does not endorse or control the content of third party websites.